INGENIOUS!  ILLEGAL!

It took me a while to figure this one out, and I'm still not sure I have it 100% correct, so bear with me while I explain it step by step -- as much for my benefit as for yours:

The Drug maker Actelion recently had to pay $360 million to settle a government action alleging that it operated an illegal "kickback" scheme. Check on the New York Times article below:

DRUG MAKER HAS TO PAY $360 MILLION

I spent some time trying to understand this, and have come up with the following:

1)  Companies exist to make profits.

2)  The simplest way to make a profit is secure a monopoly on the product. That's essentially what drug makers get when they come up with a drug that does what no others can, or does it better. To reward the company's investment of effort and research, our government gives it a temporary patent, and while it lasts the drug maker charges as much for its medicine as it can get away with.

3)  But what if there are competing products on the market? The drug maker could collude with its competitors to fix prices -- but that's illegal (though some, as we've shown, are trying it anyway). Or it could offer coupons and other discounts to needy patients, thus blunting the public outrage over the price hikes, while they pass the full cost of the medicine onto the insurer, who then passes it on to us. Thus all is well -- at least in corporate board rooms.

4)  But what if that insurer is the Government, and the patient is on Medicare? Government law requires Medicare patients to pay a co-pay, partly to encourage them to choose a less expensive drug, and encourage among drug makers some Competition -- the  dreaded"C" word hated by drug makers.  Therefore many drug makers have come up with an ingenious plan to donate to "charities" that help with drug payments, which is legal so long as there's no collusion between the drug maker and the "charity",  for if any information were shared between them, it could go to swinging business to the drug maker and thus stifle Competition  -- that dreaded "C" word again -- one of the main reasons for the co-pay. Actelion however, ignored the law, got and used info from the "charity." Thus, in this scheme, Actelion got its charitable deduction, and got to pass along the full cost of the medicine to the government, which got stuck with the bill. Actelion got to have its cake and eat it, too. Neat, eh? 

The government doesn't think so, and has gone after not only Actelion, but many other drug companies, including United Therapeutics (who paid $210 million), and our darling, Pfizer ($24 million). Several others have disclosed they also are under investigation. In the Times, we read that

“Pharmaceutical companies cannot have it both ways — they cannot continue to increase drug prices while engaging in conduct designed to defeat the mechanisms that Congress designed to check such prices and then expect Medicare to pay for the ballooning costs,” Joseph H. Hunt, an assistant attorney general for the Justice Department, said in a news release.

And I say, as I've said previously, that if Single-Payer is to do more  than eliminate bureaucratic bloat and the obscene profits of healthcare CEO's, it's going to have to robustly address abuses such as these, together with others that we've detailed on this blog. 

Healthcare workers -- including doctors and nurses, and all those assisting, such as those who produce medical devices -- need to be compensated fairly. That should go without saying, but I need to say it here so I won't be misunderstood when I state that the Profit Motive must be completely eliminated from medicine!

Dio

PS: If you'd like to comment (and I encourage you to do so),  please click on the number of comments area and in the "comment box" that appears,  kindly share your thoughts.

IT'S AN EMERGENCY!

On July 5th of this year, PBS NewsHour had a very short presentation about the skyrocketing costs of  emergency rooms. A link to it is below, and I really think you should see it; it's as revelatory as it is short:

https://www.pbs.org/newshour/show/why-there-are-shocking-costs-on-your-emergency-room-bill

When the patients got the bill for these procedures, the sticker shock must have been amazing! $629 for a single band-aid for this Connecticut one-year-old, $939 for a bit of toe ointment for the Virginia toddler, and $7924 to fix the broken jaw of the man in Texas -- what was going on, here? There was a lot going on that you could see -- and a lot that you were not allowed to.

Not very many people know that there is a "Facility Fee" charged for just going through the Emergency Room door. This fee is often the greater part of the patient's bill. And that fee varies widely depending on the deal that the Hospital can make with the insurance companies. As was pointed out in the video, there could be a hospital across the street whose Facility Fee would be nothing like that of its medical neighbor. 

How can they get away with this? The reporter expressed the opinion that these hospital ER rooms were acting like monopolies. After working hours, or during the weekends, the ER is a patient's only recourse. and it can charge what it likes. When you add to this the not infrequent practice of having the patient treated by out-of-network doctors -- as was the surgeon in the case of the Texas man with the broken jaw. -- the patient is due for a rueful shock.

Of course the hospitals rightfully point out that it's very expensive to run a hospital, to keep the lights on in the emergency room, with  enough doctors, nurses, technicians, etc ready to go even if there is nobody to treat. And of course. there's the expense incurred by many of the patients, who, if not indigent, will be unable to pay the exorbitant rates charged. 

Is the hospital merely trying to cover costs,  here, or do they see the ER as a profit center?  They hold their fiscal cards so close to their chests that you can't know for sure. 

But in web forum Quora I read; "Modern Healthcare quotes Dr.Andrew Agwunobi, head of the hospital performance practice at Berkley Research Group, as saying that hospitals traditionally did not invest much capital in the ED in the belief that it provided mostly uncompensated care. The underlying assumption was that delivery system reform would ultimately reduce the number of visits to the ED and steer patients toward lower-level settings.'What they found was that the financial health of the hospital was actually in jeopardy. Most of the revenue of the hospital was actually coming from the emergency department.'"

This suggests to me that Dr. Agwunobi was portraying the ER as a hospital-saving profit generator. And he was not the only one to recognize this: President Obama proposed regulations that would limit the ER profits, but such a loud howl sprang up and such a strong push-back came from the hospital community that he abandoned the idea, and it has not been touched since.

Meanwhile, the insurance companies have become increasingly unhappy about the  ER charges they were having to pay -- so much so that in the Vox series alluded to in the video included here, it was reported that the Anthem Insurance Company has decided that -- in 4 states at least  -- it would pay only for ER visits to address conditions that proved life-threatening.  As you can imagine, this has caused very unhappy results! There was a woman -- a nurse as it happened -- whose severe pain felt to her like it might be appendicitis. It being a weekend, she went to the ER, which performed a battery of tests on her and determined that what she had wasn't appendicitis but ovarian cysts. They gave her  a couple of pain killing pills and an order to see her Gynecologist. They also gave her a bill for some $1200. Anthem informed her that since her condition wasn't going to kill her any time soon, the charges were hers to pay -- not theirs. 

In other words, the insurance company was telling the woman to be her own doctor, and decide whether or not the ER visit was really necessary, or whether she could risk waiting for Monday when her Gynecologist would be seeing patients.

This is only one example of how the profit motive has become so enmeshed with medical practice, that lives are put at risk -- human lives being secondary to the fat profits of the industry, and the huge salaries of their CEOs.

We cannot go on with this broken system. The price-gougers and the very rich may like it just fine, but for us regular folks, it's an emergency.

Dio